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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. AFC = TFC/Q






2. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






3. The price of a good measured in units of currency






4. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






5. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






6. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






7. Ed = 1






8. Two goods are consumer substitutes if they provide essentially the same utility to consumers






9. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






10. All firms maximize profit by producing where MR = MC






11. Product demand - productivity - prices of other resources - and complementary resources






12. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






13. The difference between total revenue and total explicit costs






14. The mechanism for combining production resources - with existing technology - into finished goods and services






15. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






16. The difference between total revenue and total explicit and implicit costs






17. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






18. Exists if a producer can produce a good at lower opportunity cost than all other producers






19. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






20. The imbalance between limited productive resources and unlimited human wants






21. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






22. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






23. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






24. A good for which higher income decreases demand






25. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






26. The marginal utility from consumption of more and more of that item falls over time






27. Costs that change with the level of output. If output is zero - so are TVCs.






28. Models where firms agree to mutually improve their situation






29. Models where firms are competitive rivals seeking to gain at the expense of their rivals






30. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






31. The ability to set the price above the perfectly competitive level






32. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






33. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






34. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






35. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






36. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.






37. TR = P * Qd






38. Ed < 1






39. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






40. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






41. Ed = 0 - no response to price change






42. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






43. AVC = TVC/Q






44. Occurs when LRAC is constant over a variety of plant sizes






45. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






46. Entry (or exit) of firms does not shift the cost curves of firms in the industry






47. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






48. The practice of selling essentially the same good to different groups of consumers at different prices






49. The additional benefit received from the consumption of the next unit of a good or service






50. Entry of new firms shifts the cost curves for all firms upward